Future regulation of Electronic Communications in the Netherlands

Transcription

1 Future regulation of Electronic Communications in the Netherlands Ex ante regulation and its alternatives The Hague, 1 July 2015 Bert Tieben b.tieben@seo.nl

2 A bit of history Wholesale access to rtv networks ( three criteria test ) 2009: OPTA decision to regulate cable networks High barriers to entry No tendency towards effective competition 2010: High Court reject OPTA decision Geographical retail market: national rather than regional 2011: OPTA judgement no regulation needed High barriers to entry but transitory Tendency towards effective competition Future regulation competition

3 Market for broadband internet

4 A few trends The demise of traditional voice telephony

5 A few trends We all have fixed broadband internet

6 A few trends Cable gains market share in broadband

7 A few trends but loses ground in the television market

8 Competition Two main providers of broadband (HHI = 0,401)

9 Competition KPN still dominates the mobile market (HHI = 0,21)

10 Consolidation Dutch telcos Before the merger of Ziggo en Liberty Global (UPC)

11 Consolidation Dutch telcos After the merger of Ziggo en Liberty Global (UPC)

12 Consolidation Dutch telcos After the potential merger of Vodafone and Liberty Global

13 Consolidation Dutch telcos After convergence of fixed and mobile internet

14 Future developments: Demand Consumer demands faster internet

15 .and supply This requires: More capacity New technology (DOCSIS 3.0, Vectoring, fiber) Building high speed capacity is expensive (mobile and fixed) Firms experience uncertainty Market uncertainty Regulatory uncertainty Political uncertainty Scale and network effects will become more dominant Still more concentrated markets

16 Access regulation promotes competition European Framework and Access directives: curtail significant market power (SMP) in the relevant wholesale markets Forward looking cost-oriented access regulation Ladder of investment: from services-based competition to infrastructure competition But: will Regulation 2.0 fit Telecom 3.0? (cf. Eli Noam)

17 More than 10 years of experience Empirics: ladder of investment had little effect on and potentially even lowered investment incentives of entrants Intra-platform competition lowers investment incentives. Inter-platform competition affects investments in fiber glass according to an inverted U-shape form. Inter-platform competition increases broadband penetration more than intra-platform competition. Kocsis, De Bijl, van der Noll, Tieben (2015). Reconsidering ex ante regulation in the Dutch electronic communication markets. Communications & Strategies, no. 98, 2 nd Q.

18 Future regulation Policy and supervision can be better focus on maximizing social welfare: Stimulating investments in high-speed networks and Adoption of access to fast networks, new services and content (OTT market). The caprice and unpredictability of market developments require more room for dynamics present in the market: Market players can discover themselves what they need (demand side); How they can optimally anticipate this, or respond to market demand (supply side). Static vs Dynamic Efficiency: Is two enough?

19 Alternative regulatory models Evaluation is based of the effects on static and dynamic efficiency So far mainly theoretical evidence exists

20 Analysis of alternative models Free wholesale price setting UK experience since 2008 Local deregulation if number of competitors for BT >4 and market share of BT < 50% Empirical research: in medium term local deregulation has positive effects on infrastructure investments of both incumbent and competitors

21 Analysis of alternative models

22 Reconsidering the role of access regulation Differential access pricing Theory: differentiated prices are superior Uniform prices but differentiated costs lowers incentives to invest in fiber Symmetric vs. Asymmetric regulation Asymmetric regulation lowers incentives in investment Theory: symmetrical regulation provides better incentives only if its combined with some form of deregulation

23 Conclusions More room for market forces; diverse and new business models Further development of complementarity and convergence Room for development from adjacent IT sectors (cloud) and service sectors (OTT) Attention to regional differences Attention to cost differences between legacy network and NGN Growing public interest concerning privacy and security Simple and clear conditions with less intervention at a detailed level Active role of the government in areas where investment in local access networks lags behind

24 Regulation vis-à-vis Competition Science and Ideology, AER 1949 Science requires Vision Preconceived idea of how the economy operates What is our Vision of market development in the telecom industries? future regulation Joseph Schumpeter ( )

25 Thank you for your attention! Bert Tieben